CHICAGO -- Raw Thrills and the amusement industry were dealt a blow on Feb. 9, when Activision Blizzard Inc. announced that it has stopped producing all Guitar Hero titles and will shut down the division that produces them.

As a result, Raw Thrills will be unable to create sequels or software updates for its Guitar Hero Arcade title, the videogame maker's vice-president, Andy Eloff, told VT.

Some 4,000-plus units of Guitar Hero Arcade are estimated to be in the field.

Raw Thrills will investigate whether creating music videogame updates for existing Guitar Hero cabinets, under other titles, might be a viable path, Eloff reported. Meanwhile, he said, Raw Thrills' U.S. distributor Betson Enterprises will continue to stock spare parts and supply full service support for Guitar Hero Arcade, as will the manufacturer's European distributor Electrocoin.

The Guitar Hero consumer videogame franchise was launched in 2005 by RedOctane and Harmonix Music Systems. It was inspired by a coin-op game, Konami's Guitar Freaks, which was by and large distributed in Asia.

California-based Activision bought RedOctane in 2006 and took over development and production of the consumer title. Guitar Hero consumer games eventually included at least 20 sequels or variations. The series overall sold more than 17 million units, hitting the $2 billion sales mark in 2008.

Guitar Hero Arcade followed a somewhat winding road to production. The consumer game, at the height of its popularity, was widely played in bars and restaurants, among other public venues that held constests. The market for an authorized, pay-for-play version -- one that was explicitly licensed for public performance -- seemed obvious.

Konami acquired from Activision the rights to create the coin-op adaptation of Guitar Hero and approached Raw Thrills to perform all design, production and manufacturing. Eloff is on record as saying that Raw Thrills was "shocked" but very pleased to receive Konami's invitation. He also told VT that Raw Thrills paid a lot for the licensing agreements to build the coin-op version.

Guitar Hero Arcade was reengineered from the ground up for coin-op use. It debuted in November 2008 at the IAAPA Attractions Expo in Orlando, FL, and officially rolled out in February 2009. | SEE STORY

By December of 2009, some operators in the Midwest reported receiving demands from a performing rights organization for $800 in music licensing fees for public performance of hit rock tunes on Guitar Hero Arcade. ASCAP said it entered into negotiations with Raw Thrills over the issue.

As news spread about ASCAP's demands, operators -- and the trade press -- sought repeatedly to get some clarity on the issue from various sources including Raw Thrills, ASCAP and the Amusement and Music Operators Association, as well as AMOA's law firm Sonnenschein, Nath and Rosenthal. All parties declined to say anything about the matter for more than year.

Following February's revelation about the consumer game's termination, Eloff admitted that Raw Thrills had also been obliged to pay costly license fees for music rights, separately from those licensing fees it had paid to Activision.

In the past two years, sales of consumer Guitar Hero games sales have fallen sharply. The latest title in the series, Guitar Hero: Warriors of Rock (2010), moved just 86,000 units. Critics accused Activision of oversaturation and poor quality control. Industry observers said the severe recession that intensified in late 2008 also played a role in weakening sales.

In a statementreleased along with its quarterly fiscal results, Activision blamed declines in the larger music videogame genre for the demise of Guitar Hero. Music-based consumer videogame sales overall have fallen 50% since 2008. | SEE ACTIVISON'S FINANCIAL RESULTS

"Guitar Hero Arcade is still earning okay on locations," Eloff said. He added that many operators of the game would be interested in seeing updates or sequels.

"I personally think there is some future for music-based videogames in arcades," he continued. "But it won't continue the same as before. There is no chance, absolutely zero chance that a sequel or update kit could be created for existing cabinets under the Guitar Hero Arcade title," he said.

Eloff also said Activision still holds the rights to Guitar Hero, but probably won't license a coin-op sequel of the now-defunct consumer game. People close to the industry have speculated that Activision may decide to have the famous title "lie fallow" for a few years, while quietly performing extensive R&D for a "new-technology" version that could reignite the consumer franchise at some future date.

As for the possibility that Raw Thrills could create a kit or update for existing cabinets while using another title, Eloff was noncommittal. "It's too early to say if we could license music without Activision for use in Guitar Hero Arcade," he said.